Deutsche Bank to pay $38 million in U.S. silver price-fixing case

A logo is pictured on the Deutsche Bank building in Geneva, Switzerland, October 11, 2016. REUTERS/Denis Balibouse

NEW YORK (Reuters) - Deutsche Bank AG has agreed to pay $38 million (31 million pounds) to settle U.S. litigation over allegations it illegally conspired with other banks to fix silver prices at the expense of investors, according to court papers filed on Monday.

The settlement, disclosed in papers filed in Manhattan federal court, came in one of many recent lawsuits in which investors have accused banks of conspiring to rig rates and prices in financial and commodities markets.

The settlement had been expected since April, though terms had yet to be disclosed. In court papers, lawyers for the investors say the deal will likely be an “ice breaker” that will serve as a catalyst for other banks to settle.

Vincent Briganti, a lawyer for the investors, said the deal provides “substantial monetary compensation plus cooperation from Deutsche Bank in the continued prosecution of this important case against the non-settling defendants.”

The settlement is subject to court approval. A spokeswoman for the German bank declined to comment.

In the litigation, investors claimed Deutsche Bank, HSBC Holdings Plc and Bank of Nova Scotia (ScotiaBank) rigged silver prices through a secret daily meeting called the Silver Fix, and accused UBS AG of exploiting that fix.

The alleged conspiracy started by 1999, suppressed prices on roughly $30 billion of silver and silver financial instruments traded each year, and enabled the banks to pocket returns that could top 100 percent annualised, the investors said.

Deutsche Bank put its seat on the silver price setting process up for sale in January 2014, and the 117-year-old practice was disbanded altogether in August that year after the German bank failed to attract a buyer.

The auction-style process, which occurred once daily for silver and twice for gold through a conference call in London, was used by industry and central banks to trade the metal and evaluate holdings.

CME Group and Thomson Reuters now operate an electronic benchmark for silver prices.

The end of the silver fix was followed by the collapse of similar benchmarks for gold, platinum and palladium, in a wave of reform for precious metals pricing procedures sparked by greater regulatory scrutiny.

Earlier this month, U.S. District Judge Valerie Caproni ruled the investors had sufficiently, “albeit barely,” alleged that Deutsche Bank, HSBC and ScotiaBank violated U.S. antitrust law by conspiring to depress the Silver Fix from 2007 to 2013.

But the judge dismissed UBS from the case, saying there was nothing showing it manipulated prices, even if it benefited from distortions.

Caproni at that time said the investors could amend their complaint, including against UBS, and a lawyer for the investors has said they planned to do so.

The case is In re: London Silver Fixing Ltd Antitrust Litigation, U.S. District Court, Southern District of New York, No. 14-md-02573.